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Lohmann v. Lohmann

Decided: April 28, 1958.

JULIA LOHMANN, PLAINTIFF-APPELLANT AND CROSS-RESPONDENT,
v.
FREDERICK F. LOHMANN, DEFENDANT-RESPONDENT AND CROSS-APPELLANT



Price, Haneman and Schettino. The opinion of the court was rendered by Schettino, J.A.D. Haneman, J.A.D.

Schettino

[50 NJSuper Page 40] Appeal and cross-appeal are taken from a judgment of the Chancery Division. Plaintiff wife instituted a suit against defendant husband for separate

maintenance and for an accounting of her share of certain real estate, business partnership, mortgages, bank accounts and for reimbursements for moneys allegedly advanced by plaintiff for payment of bills.

The separate maintenance litigation was tried first and apart from the property litigation. The trial court granted a judgment for separate maintenance, entered June 27, 1956.

On May 3, 1957 judgment was entered (A) in favor of the plaintiff (1) for an accounting as to certain items: i.e. , (a) for plaintiff's one-half interest in the net rents, profits and issues derived from property located at 3701-03 Park Avenue, Union City, owned by the parties as tenants by the entirety; (b) for plaintiff's one-half interest in a $5,000 bond and mortgage; (2) for reimbursement to plaintiff by defendant for one-half the advances made by plaintiff in payment of taxes and mortgage amortization, and interest for their home at 8 Hamilton Avenue, Weehawken; and (B) against plaintiff in that all other demands by plaintiff were denied. Plaintiff appeals from so much of this judgment as denies her an accounting in respect of her alleged partnership in the restaurant business carried on at 3701-03 Park Avenue, Union City, between the years of 1927 and 1953. Defendant cross-appeals from all the above-named provisions of the judgment in favor of plaintiff.

The factual contentions, counter-contentions and the testimony are in most respects mutually contradictory and are complicated by the fact that many of the witnesses seemed prone to self-contradiction. The basic facts seem to be as follows: For several years before his marriage defendant had operated a small restaurant and "speakeasy" in partnership with his brother, Robert, at 3701-03 Park Avenue, Union City. The brother died in 1924 and defendant continued the business individually.

Plaintiff and defendant were married on September 29, 1925. Prior to the marriage plaintiff was a widow with two children; Eric, born 1914, and Otto, born 1921. She was operating a rooming house at 612 Hudson Street, Hoboken, prior to her marriage and continued to operate it

for some years after the date of marriage. Defendant was one of her roomers. They continued to live together at the rooming house after their marriage, and the evidence would seem to indicate that they pooled their resources in joint bank accounts.

In July 1927 the premises at 3701-03 Park Avenue were purchased with mutual funds in the name of a straw-man for approximately $50,000. Simultaneously with this conveyance the straw-man delivered a deed conveying the premises to plaintiff and defendant as tenants by the entirety. This deed was not, for self-evident reasons due to the "speakeasy" business, recorded until April 1933. The property consisted of a plot and building, including a tavern on the first floor and six apartments. Part of these premises was used during Prohibition in the speakeasy operations. The rest was rented as apartments. Subsequently, an adjacent lot was purchased by both parties as tenants by the entirety for use as a parking area adjunct to the restaurant business.

In 1933, at the end of Prohibition, the premises were altered and the operation was transformed into a duly licensed restaurant and bar. In that same year the mortgage on the business premises was called in and plaintiff mortgaged her rooming house in order to help pay off the mortgage. Defendant admits that he collected all the rents from the six apartments from 1927 to 1953 when the premises were destroyed by fire. Defendant appropriated all the money for his personal use. Additionally, defendant never paid any moneys by way of rent to plaintiff on behalf of his business use of the first floor, the basement, and the parking area. The parties never lived on the business premises.

Plaintiff subsequently sold her rooming house, realizing only about $2,000 because of the substantial mortgages thereon. They purchased, by the entirety, a home at 22 Kingswood Road, Weehawken, in 1943 or 1944. This property was sold for $22,000 in 1951 and the proceeds used in the erection of their present home at 8 Hamilton Place, Weehawken. Although plaintiff had contended that defendant

had kept her share of the sale price of $22,000, she waived this claim at oral argument.

Thus we have the outline of the transactions which are the subject matter of this suit.

The only issue properly raised by plaintiff on appeal is her contention that, by mutual oral agreement, she and her husband have been partners in his business enterprise since their marriage. There is no doubt that plaintiff in many ways was helpful to defendant in the operation of his business insofar as she drove him on his shopping expeditions to New York and elsewhere to purchase provisions for the restaurant; that she performed some services without compensation at the establishment, and that she alone, other than defendant, had access to the money in the safe -- all prior to the breakdown of this marriage. Plaintiff also claimed and she proffered corroborating testimony that defendant held her out as a partner in business as well as marriage, and many of the insurance policies as well as the income tax returns bore the names of both parties.

But her testimony as to the partnership agreement is unconvincing. There are many contradictions in plaintiff's own testimony as to when they resolved to operate as partners -- before or after their marriage -- so that the evidence in this regard is inconclusive at best. She is generally "substantiated" by a witness who had been reduced in employment status due to drunkenness and who was found guilty of perjury during the trial on a question not too material to the trial; her two sons; and two friends. Some of plaintiff's own witnesses contradicted her story. In addition, in the separate maintenance phase of the litigation, plaintiff did not disclose any claimed partnership but rather alleged by affidavit that the business belonged to defendant only. Plaintiff made no claim throughout the year 1954 -- including any reference in the separate maintenance complaint dated October 7, 1954 -- pertaining to the alleged partnership. In July 1955 plaintiff first made a demand for an accounting based upon the alleged partnership claimed by her to have been created in September 1925.

Counterbalancing such testimony is defendant's proof by substantial testimony that defendant never held plaintiff out as a partner, and a study of the record shows that plaintiff was unfamiliar with the management and details of the business. The business bank account was in defendant's name only. All business bills were paid by defendant. The liquor license was in defendant's name only. The copies of income tax returns filed by defendant in the joint names of plaintiff and defendant do not disclose any partnership. If such existed, partnership information returns were required. None was filed.

The remaining element of plaintiff's proof on this phase of the case was the testimony referable to the insurance policies which were in their joint names. Plaintiff produced an insurance agent as a witness who testified that the business insurance policies were issued up to 1950 in the names of defendant and plaintiff. On cross-examination he admitted they had been so issued without any direction by defendant; that in 1950 defendant told him the policies were so issued by mistake and ordered the witness to change them so that defendant's name alone appeared thereon as the assured. Moreover, when the fire of December 1953 destroyed the business property, plaintiff and defendant were paid equally by the insurance companies, but defendant alone received the insurance moneys for the contents of the bar and restaurant and reimbursement for loss due to business interruption. In an affidavit dated October 7, 1954, and filed in her matrimonial part of the litigation, plaintiff referred to their joint ownership of these premises, complained that due to the fire the insurance company made a money adjustment for the loss of the business fixtures attached to the premises, but that she had received no part of that adjustment and therefore sought an accounting for her one-half interest therein.

R.R. 1:5-4(b) in part states:

"On a review of any cause * * * involving issues of fact not determined by the verdict of a jury, new or amended findings of fact may be made, but due regard shall be given to the opportunity of

the trial court to judge of the credibility of the witnesses." (Emphasis added)

This court has said:

"Beyond that, every intendment is in favor of the judgment under review, and we should not disturb the court's finding of fact unless we are well satisfied that the finding is a mistaken one." Capone v. Norton , 11 N.J. Super. 189, 193 (App. Div. 1951), affirmed 8 N.J. 54 (1951); 5 C.J.S. Appeal and Error § 1533, p. 262.

Although we have the power to make new or amended findings of fact, "its exercise is permissive in our sound discretion where required to do justice in the particular case." Midler v. Heinowitz , 10 N.J. 123, 128 (1952). The burden of proving the existence of a partnership was upon plaintiff, who alleged it, and she failed to carry this burden. Fenwick v. Unemployment Compensation Commission of New Jersey , 133 N.J.L. 295, 300 (E. & A. 1945); Friedlander v. Friedlander , 142 N.J. Eq. 3, 14 (Ch. 1948). We affirm the trial court's finding on this issue.

At oral argument defendant's counsel urged us to bear in mind the above-quoted principles of appellate review in determining plaintiff's appeal, and counsel -- in answer to a query -- conceded that the same principles apply to his client's cross-appeal.

Defendant, in his cross-appeal, contends that the trial court erred in requiring an accounting for the reasonable rental value of the tavern, restaurant and parking lot properties. He concedes that, in the event of an ouster by a tenant by the entirety, an ousted co-tenant has a right to one-half the reasonable rental value of the premises, citing Mastbaum v. Mastbaum , 126 N.J. Eq. 366, 370 (Ch. 1939), but claims no ouster or exclusion can be found against defendant.

After the trial court's first letter opinion, a more specific finding was requested from the trial court with reference to this issue. After submission of memoranda of law and oral argument, the trial court stated that:

"After full review of the law and with consideration of the particular circumstances of record, I believe defendant's assumed control

of the premises (held by the parties as tenants by the entirety) amounted to an exclusion, if not an ouster of plaintiff from the use of said premises for the sole benefit of defendant. See Mastbaum v. Mastbaum , 126 N.J. Eq. 366, at pp. 369, 370 (Ch. 1939). Moreover, it does not appear that the premises, particularly the business portion, was utilized at any time as the domicile or residence of either party."

We have progressed far since the days when the husband had absolute control of the premises held by the entirety and was entitled to the use and possession of the property during the joint lives of the husband and wife to the exclusion of the latter's rights. Washburn & Campbell v. Burns and McCabe , 34 N.J.L. 18, 20 (Sup. Ct. 1869); 2 Tiffany, Law of Real Property (3 rd ed.), § 435, p. 232; 26 Am. Jur., Husband and Wife , § 78, p. 703. Within the last century the law concerning the property of married women has been altered so radically that the common law disabilities of a wife are almost entirely of historic interest only. 3 Holdsworth, A History of English Law (3 rd ed. 1923), pp. 725-733. See notes on " Effect of the Married Women's Property Acts upon Estates by the Entirety ," 37 Harv. L. Rev. 616 (1924); and also see note in 12 Iowa Law Rev. 415 (1927). In Ross v. Ross , 35 N.J. Super. 242, 246-247 (Ch. Div. 1955), Judge Goldmann stated:

"A tenancy by the entirety is a tenancy in common between husband and wife, for their joint lives, with the remainder to the survivor in fee. Each of them is seized per tout et non per my. It is well settled in this State that where title to real property is held by husband and wife as tenants by the entirety, 'the wife holds in her possession during their joint lives one-half of the estate in common with her husband, and, as between themselves, the respective rights of the parties are those of tenants in common, * * *.' Nobile v. Bartletta , 109 N.J. Eq. 119, 122 (E. & A. 1931). This rule was recognized in O'Connell v. O'Connell , 93 N.J. Eq. 603 (E. & A. 1922), an action brought by the wife against the husband for an accounting of rents, issues and profits of the premises standing in both their names. The court held that ordinarily one of the rights of a tenant in common as against his co-tenant is to have an accounting of rents collected:

'The principle upon which the rule rests is that a tenant in common, in leasing the common property and in collecting the rents from the lessee, acts not only in his own right but as the representative of his co-tenants, * * *.' (93 N.J. Eq. at pages 605-606)."

In Neubeck v. Neubeck , 94 N.J. Eq. 167, 27 A.L.R. 172 (E. & A. 1922), the court held that where a wife left her husband and the family domicile voluntarily and without cause, the husband was not required to pay the rental value of the dwelling house which was still being used as the family residence by the husband and son of the marriage (94 N.J. Eq. at page 172). However, as to the part of the premises which was rented out and for which the husband collected rents, the court stated that the husband in collecting the rents from the lessees, acted not only in his own right, but as the representative of his co-tenant, and that, consequently, to the extent that the moneys so collected represent the rental value of the interest of his co-tenant, " it is held in trust by him " for her use (94 N.J. Eq. at page 169, emphasis added).

Although the trial court found that plaintiff had failed to carry her burden of proof to establish a partnership and therefore had no interest in the business or profits allegedly derived therefrom by defendant, it found that defendant had assumed control of the entire premises for his sole benefit and to the exclusion of the plaintiff.

In 14 Am. Jur., Cotenancy , § 31, p. 99, we note:

"Under the ancient rule of the common law, one cotenant could occupy the whole of the common property and appropriate all the rents and profits thereof without accounting to the others, unless his acts amounted to an ouster, or unless he had agreed to become a bailiff for them. While this rule was based upon the settled principle that cotenants, though jointly seised of the entire estate, have a several and equal right of entry and possession, its injustice finally became recognized by Parliament, and the Act of 4 Anne, Chap. 16, was enacted for the purpose of changing it. This statute made any tenant in common who received more than his just share of the rents and profits liable to his cotenants for the excess; and it was no longer necessary that he should take as bailiff by appointment in order to make him responsible. The Statute of Anne has been specifically adopted in a number of states, but even where it has not been adopted, the courts frequently hold it to be applicable as having been ingrained in the common law long prior to the Revolution."

and in § 33, page 100 is found:

"The question as to whether a cotenant in possession of the common property is liable to his cotenants for the value of its use and occupation, or for profits that may have accrued to him from operations thereon, is involved in considerable confusion, * * * But the courts are in unison in holding that where the occupying tenant has ousted his co-owners and excluded them from possession of the property or a part thereof, he must answer for the value of the use and occupation whether he has profited thereby or not."

In Izard v. Bodine , 11 N.J. Eq. 403, 404 (Ch. 1857), Chancellor Williamson stated the common law rule with reference to a co-tenant occupying the whole estate to the exclusion of other co-tenants:

"1. If one tenant in common occupies the whole estate, claiming it as his own, it is an ouster of his co-tenant, who must first establish his right at law, and thus recover his mesne profits -- for one tenant is bound to account to another only as his bailiff appointed by contract, express or implied"

The Chancellor then pointed out the rule with reference to one co-tenant receiving the rents, issues and profits of the estate.

"2. Where one tenant in common actually receives the rents, issues, and profits, then he may be compelled to account for such profits actually received; but this is by statute, both in England and this state, and not by the common law. 4 Anne, c. 16; N.J. act of 1794, Nix. Dig. 5, Pl. 3; Sargent v. Parsons , 12 Mass. [149] 153."

In Davidson v. Thompson , 22 N.J. Eq. 83, 85 (Ch. 1871), Chancellor Zabriskie stated:

"* * * A tenant in common is not, in general, liable, unless he has excluded his co-tenant from the premises, or unless he has taken and kept possession of such premises as are not capable of a joint occupation, which is, in effect, an exclusion of his co-tenant."

In Edsall v. Merrill , 37 N.J. Eq. 114, 116 (Ch. 1883), the court said:

"This court has adopted a construction rather more liberal to the tenants out of possession. We hold, as the English courts do, that where one of several tenants occupies simply as tenant in common,

and not to the exclusion of the others, he is not liable to account. But we also hold that an exclusion may occur where there is no express refusal, by the tenant in possession, to allow the others to occupy, as where one of several tenants takes possession of premises which are not capable of joint occupancy; in that case his occupation is an exclusion of the others."

In Hardman v. Brown , 77 W. Va. 478, 88 S.E. 1016, 1019 (Sup. Ct. App. 1916), we note that an ouster by a co-tenant does not necessarily mean physical eviction or exclusion but means possession attended by such circumstances as to evince a claim of exclusive right and a denial of the right of the other tenant to participate in the profits. The part of the premises here occupied by defendant for his business was not used as living quarters nor was it capable of joint occupancy.

We are disturbed by one facet of this case which was neither briefed nor argued. It pertains to the second group stated above by Chancellor Williamson. The New Jersey statute referred to by Chancellor Williamson in Izard v. Bodine, supra , as " N.J. Act of 1794, Nix. Dig. 5 Pl. 3" eventually became R.S. 2:38-3. The official report of the statute reads as follows:

"III * * * That actions of account shall and may be brought and maintained by one joint tenant or tenant in common, his [or her] executors or administrators, against the other, as bailiff, for receiving more than comes to his [or her] just share or proportion, and against the executor or administrator of such joint tenant, or tenant in common." (The words in brackets were part of the original law.) Paterson, Laws of the State of New Jersey (1800), p. 140.

When the recent revision of Title 2 took place and became Title 2A, effective January 1, 1952, this statute was repealed. Nevertheless, since the repealer our courts have continued to recognize the principle permitting an accounting as enunciated by the voluminous case law since Izard v. Bodine, supra , including the 1922 opinions of the Court of Errors and Appeals in the O'Connell and Neubeck cases, supra. The cases since the repealer are: Brown v. Havens , 17 N.J. Super. 235, 241 (Ch. 1952); Mangan v. Mangan , 40 N.J. Super. 99, 101

(Ch. 1956); Ross v. Ross, supra; Dorf v. Tuscarora Pipe Line Co., Ltd. , 48 N.J. Super. 26, 35 (App. Div. 1957); Polombo v. Polombo , 48 N.J. Super. 13, 15 (Ch. 1957). In view of the history of this principle and its recognition over the long span of years, we are of the opinion that the law of New Jersey is settled that, in this type of case and under circumstances such as here present, a tenant in common is entitled to an accounting from the co-tenant who has collected the rents, issues and profits.

It can reasonably be concluded that these opinions "are only 'evidence of what is common law'" of today, regardless of the historic statutory basis for this principle. Heise v. Earle , 134 N.J. Eq. 393, 402 (E. & A. 1944). Despite the fact that R.S. 2:38-3 was not reenacted by means of the adoption of Title 2 A as of January 1, 1952, the latter statute expressly provided that:

"4. Title 2 of the Revised Statutes, as amended and supplemented is repealed, but such repeal shall not affect any right now vested in any person pursuant to the provisions of said title, nor any remedy where an action or proceeding thereunder has heretofore been instituted and is pending on the effective date of said repeal.

5. The said repeal of Title 2 of the Revised Statutes, as amended and supplemented, shall not of itself be deemed to revive any common law, right or remedy abolished by any provision of the said title." L. 1951, c. 344, secs. 4, 5.

Under a similar circumstance involving the repeal of the statute relating to the correction of illegal sentences, the late Chief Justice Vanderbilt, in the case of State v. Culver , 23 N.J. 495 (1957), commented upon the above quoted words of the statute:

"The obvious intention of the Legislature was to continue the law in its existing state except in such instances where there was express provision made for a change or some positive inconsistency was created that was incompatible with the provisions of the prior law; see L. 1951, c. 344, sec. 6." (23 N.J. at page 504.)

"* * * One of the great virtues of the common law is its dynamic nature that makes it adaptable to the requirements of society at the time of its application in court. There is not a rule

of the common law in force today that has not evolved from some earlier rule of common law, gradually in some instances, more suddenly in others, leaving the common law of today when compared with the common law of centuries ago as different as day is from night. The nature of the common law requires that each time a rule of law is applied it be carefully scrutinized to make sure that the conditions and needs of the times have not so changed as to make further application of it the instrument of injustice. Dean Pound posed the problem admirably in his Interpretations of Legal History (1922) when he stated, 'Law must be stable, and yet it cannot stand still.'" (23 N.J. at page 505.)

We paraphrase an opinion of our Supreme Court in Greenspan v. Slate , 12 N.J. 426, 439 (1953), that it would shock one's sensibilities to think that the common law would permit this defendant not to account to plaintiff for the rents, issues and profits; that it reflects a point of view which is utterly inconsistent with today's common feelings of humanity, and that the courts must safeguard a spouse against such unnatural conduct by the other spouse. We therefore here find no ground for denying plaintiff her accounting. 4 Powell, Law of Real Property § 604, page 605, and § 623, pages 661, 666.

The marital discord extended back for many years. We accept the testimony of plaintiff that she had pressed defendant for moneys and an accounting over the years ever since they bought the properties; that defendant had assured her that she had nothing to worry about and that she trusted defendant. In view of the husband and wife relationship, the trial court was justified, on the unique facts of this case, in concluding that defendant's actions amounted to an exclusion. Davidson v. Thompson, supra , and Edsall v. Merrill, supra. Moreover, defendant admitted that he collected all the rents from other tenants and kept the money, and that he never paid rent for the parts of the premises used by him for his business. Cf. T.G.W. Realties, Inc., v. Long Island Bird Stores, Inc. , 151 Misc. 918, 272 N.Y.S. 602 (Sup. Ct. 1934). In view of the Neubeck case and the authorities cited and quoted in the Ross case, no longer is there a doubt that had defendant here rented out the parking area, bar and restaurant part

of the premises to a third person and collected rents therefor, he would be required to account to plaintiff. We observe no distinction between defendant's renting out business premises to a stranger while acting as if defendant were the sole owner, and taking possession of part of the business premises as if he were the sole owner. Their actions were consistent with the time-honored concept that the husband probably has the larger share in managing the common property and that it is advisable to give him a free hand in its management since he is the head of the family. But the problem is where to draw the line so as to protect the wife and her property without unduly fettering the powers of the husband. 3 Holdsworth, A History of English Law (3 rd ed. 1923), p. 521; 27 A.L.R. 184, supplemented by 51 A.L.R. 2 d 388, 437, 443.

But, it is clear that defendant violated the trust duty referred to in the Neubeck case, supra , 94 N.J. Eq. at page 169. In Andrews v. Andrews , 155 Fla. 654, 21 ...


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